CNN: 'Moneyline' guest Dennis Grabow, chief executive of Millennium Investment, predicts global Y2K recession...[transcript]

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[This is a transcript of the 23rd December CNN 'MONEYLINE' interview with Dennis Grabow, which was first referred to in a thread below...]

We're joined now from Chicago by Dennis Grabow, founder and chief executive of Millennium Investment. Dennis, welcome to MONEYLINE.

DENNIS GRABOW, CEO, MILLENNIUM INVESTMENT: Thank you, Willow.

BAY: So you believe that we're not just going to see Y2K disruptions or even a market correction, but a global recession?

GRABOW: Yes, I see a global economic recession coming, and contrary to your opening piece, I'd like to say that I don't see chaos, I see a recession, and recessions aren't pleasant, certainly. But that's all I see, and I think the key is that when we look at the global infrastructure and we look at global supply change, it's very easy to see where we can have some disruptions.

BAY: Specifically, what sorts of problems do you think we're likely to see?

GRABOW: Well, I think -- what I'm surprised is that more people don't see it. I mean, the research that we've been doing is very clear. We've been reading the 10Q and 10K announcements that the companies are putting out.

You know, for example, I brought Motorola's 10Q release with and in there they indicate that some of their suppliers and -- are not providing assurances that they are going to be ready. They express concerns about energy issues in some foreign countries, and they also express concerns about some of their customers maybe not buying as much product.

So in our view, all we're saying or suggesting is that we believe that the earnings of the company are going to decline, and in the kind of market that you're talking about, we think that this is going to lead to basically a decline in multiples and thus causing a correction in the market.

BAY: But walk me through literally, the nuts and bolts of the disruptions that we are likely to see that will be significant enough to cause a global recession?

GRABOW: Well, let's take foreign trade. This is an area that we put on the national agenda. The foreign trade transaction, say between Chicago and China, is a very complicated issue. There is what we call about a dozen participants in just one trade transaction, and it's all tied together with different types of technology. We're talking about energy systems; we're talking about telecommunications; we're talking about basically two port authorities; we're talking about a shipping company, a Customs Office in both these ports, freight forwarders, but it's a very complex transaction, and it's all tied together with technology.

And all we're suggesting is that some disruptions will occur along the way. The testimony that we see -- and as we talk to different people, it's becoming more and more accepted that overseas we're going have some disruptions. And what we're saying is that here in the United States, we keep saying we're not going to be impacted by any issues, and we don't accept this, because foreign trade represents about 20 percent of our economy. So as we saw in 1997, when southeast Asia had problems, it affected the United States. And so these are the types of things we believe will occur. If there is a...

BAY: You were wrong once before about this, in that you predicted we'd see Y2K problems a year or two ago. Why are you so convinced you're right now, and what happens if you are wrong? Will you give up forecasting?

(LAUGHTER)

GRABOW: Well, you can never be afraid to make a forecast. That's just part of human nature.

The thing about the factories -- if you go on to the factory floor, for example, these factories can take up to a year to fix. And we're all assuming and trusting that this is all going to be done in time. And where I was wrong in 1997 when I made my original forecast, I believed that we were going to have a national debate about the issue and people would understand it.

Right now, I'm really the only one except for maybe a couple of others that really believe this is a serious economic issue in terms of how it can affect earnings. And very shortly we're going to find out.

BAY: We will indeed.

Dennis Grabow, thank you very much for joining us tonight with that sobering thoughts.

[ENDS]

-- John Whitley (jwhitley@inforamp.net), December 24, 1999

Answers

Weeeeellllll, Eddie yardeni ain't the only one anymore. Sound to me that some serious smoke-filled-room-bedwetting is going on.

Kook

-- Y2Kook (y2kook@usa.net), December 25, 1999.


Commentators who predicted that "the stock market will decline prior to the year 2000" mistakenly assumed that the affected people would act in a *responsible* manner. They did not realize that the stock market would be caught up in a once-in-a-lifetime bubble, that government and business leaders would feed massive disinformation to the country, that the majority of the citizens would be in complete denial, and so on.

When you make bad assumptions, you usually get bad results.

-- Charles Moorehead (cmooreh890@aol.com), December 25, 1999.


Commentators are more inclined to support BS like "the market anticipates events and has told us that Y2k will be a non-event". The interview shows that commentators cannot keep from needling their guests. "You were wrong before, so why do you think you are right now? Will you give up forecasting?" is RUDE. Especially since CNN contributes to the "don't panic at all cost" spin control. I have rarely seen a guest that replied in kind.

-- W (me@home.now), December 25, 1999.

Ralph Acampora isn't always right in his "forecasts" but no commentator asks him if he's going to give up forecasting. Yeah, an unbiased media.

-- Raymond (srr@tt.com), December 25, 1999.

I thought the idea about will you continue to forecast if wrong was a bit of a turn-off.

The very idea that a very, very few folks risk there careers to stand up for what they believe in, should at least stand for something. If it ain't positive for the Bull Market, you're considered "a drag" and this society does not deal well with that. I like Money line, and I think Bay does a great job, however after viewing that broadcast, my opinion has changed. Than again, she's only the messenger.

Merry Christmas.

-- LALA (LaLA@LALALAND.com), December 25, 1999.



Grabow has numerous research papers on Y2K and financial markets on his website www.millenniuminvest.com. The Wall Street Journal did a piece on him as well this past Monday. In addition, he has been retained by MSNBC as a financial analyst for their Y2K coverage.

-- ronnie beard (rbeard@eatel.net), December 25, 1999.

I saw that piece on CNN, and was frankly shocked that they even let it air (live feed!). You could tell that the two interviewers did NOT want to hear what he was saying and they tried to subtly discredit him, and at the end did cut him off and quickly changed to a happy story of profit to erase any short term effect. It was incredibly insulting, the "give up forecasting" comment and was all too telling of the blind Clintonesque country in which we live.

It was refreshing to hear this guy (Grabow) address the widespread denial:
Right now, I'm really the only one except for maybe a couple of others that really believe this is a serious economic issue in terms of how it can affect earnings.

He states the OBVIOUS that is staring us all in the face and yet is phenomenally ignored,

I think the key is that when we look at the global infrastructure and we look at global supply change, it's very easy to see where we can have some disruptions.

Well, I think -- what I'm surprised is that more people don't see it. I mean, the research that we've been doing is very clear. We've been reading the 10Q and 10K announcements that the companies are putting out.

CNN simply bookended the story will gleeful tales of prosperity.
Soon the illusion shall be clarified.

-- not another denialist (economist@global.dependence), December 25, 1999.


GRABOW: Yes, I see a global economic recession coming, and contrary to your opening piece, I'd like to say that I don't see chaos, I see a recession, and recessions aren't pleasant, certainly. But that's all I see, and I think the key is that when we look at the global infrastructure and we look at global supply change, it's very easy to see where we can have some disruptions.

It's amazing, isn't it? The financial media seem to characterize any stance which is the slightest bit negative (in this case, seeing a widespread recession similar to the Asia crisis a few years back) as predicting "chaos". Anything less than "blues skies and green lights" is just not acceptable, I guess. *sheesh*

-- Mac (sneak@lurk.hid), December 26, 1999.


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